What You Need to Know About Eviction and Bankruptcy
Rent is often our largest monthly expense, and if you’re experiencing financial stress, it can be the hardest bill to pay. A few months of missed rent payments could lead to an unwelcome eviction notice on your front door. So, if you’re already considering bankruptcy, you may be wondering how it could affect your eviction status.
It’s important to remember that you still have rights, however, and you don’t have to go through the process alone.
Evictions don’t happen overnight. Most states require landlords to give tenants written notice regarding any potential issues, although the timing may vary from state to state. If the tenant fails to remedy an issue — like months of unpaid rent — the property owner must file an eviction action in court and obtain a judgment of possession before enforcing the eviction. All of this takes time, so you should be on notice if you are facing eviction proceedings.
Filing for bankruptcy can also take time. Under Chapter 7 bankruptcy proceedings, it could be months before your debts can be discharged even if your case is simple. And Chapter 13 bankruptcies can require years-long repayment plans to fully discharge your debt. Therefore, timing can be critical when it comes to bankruptcies and evictions.
When you file for bankruptcy, the court may grant you what is known as an “automatic stay.” This order blocks certain creditors from taking legal action against you until the court completes your bankruptcy proceedings. An automatic stay can apply to landlords, putting a hold on pending evictions. But there are two major exceptions to this rule:
- If your landlord is evicting you for endangering the property or criminal activity on the property
- If your landlord obtained a judgment to retake possession of the rental property before you filed for bankruptcy
So, if your landlord has already completed eviction proceedings and won a judgment of possession, a last-minute bankruptcy filing will not stop your eviction. However, if the judgment was for failing to pay your rent, some states allow you to reinstate the stay and “cure” the delinquency by paying back due rent.
Very few states allow you to clear an eviction in bankruptcy after your landlord obtained a judgment of possession, and the process can be complicated. All bankruptcy proceedings are handled in federal court, so you’ll need to file a certification with the bankruptcy court that advises whether your state allows you to cure the default. And you’ll also need to send a copy to your landlord.
You’ll need to pay all back rent within 30 days of filing for bankruptcy, and you may need to deposit any rent that will come due in that time with the bankruptcy court clerk. Once you’ve done that, you’ll certify with the court that you’ve met your past due rent and future rent obligations, and the evictions proceedings may be dismissed.
If, on the other hand, the eviction is not complete, the automatic stay that comes with a bankruptcy filing may temporarily delay your eviction proceedings, but it is unlikely to stop the proceedings altogether.
Sadly, filing a bankruptcy petition could alone be the basis for an eviction, even if you are current on your rent payments. Some leases include filing for bankruptcy as a cause for eviction, and others allow landlords to evict you and/or terminate your rental for any reason or no reason, including filing for bankruptcy. And although bankruptcy can delay eviction, the landlord can also petition the bankruptcy court to terminate your lease and/or evict you.
Generally, however, you don’t need to tell your landlord that you have filed or may be filing for bankruptcy. But read your lease carefully to see if it contains any provisions regarding bankruptcy filings, as some property owners and managers require a certain credit score for renters. Also keep in mind that your landlord might become a creditor in your bankruptcy proceedings, in which case they may still receive notice of the filing directly from the bankruptcy court.
Keep in mind also that a bankruptcy filing could remain on your credit report for up to 10 years and have an adverse effect on your ability to rent or buy property in the future.
Hiring a bankruptcy lawyer or law firm to represent you in your bankruptcy case can help guide you through the challenges that come with filing. Their legal advice can make the different between a positive debt relief experience and a negative one. Get the professional help by hiring a bankruptcy attorney you can trust. Many will offer free consultations and are not allowed to share your confidential information.
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